Tony DiCostanzo: We engaged a professor out of Stanford who had developed some studies documenting a return on investment for companies that implemented this wellness program. We were able to take that and develop a new company without all of the baggage that the other firm had. That was the first personal foray into entrepreneurship using the company experience and applying it into a new company. It felt more comfortable, if you will, to get my feet wet in something that I knew.
About eight months later, I pulled in a business partner who was involved with the previous firm. Together, we grew the company over a two and a half year period. We had the good fortune of a private equity firm out of Chicago buying us to integrate into their portfolio of companies. At the same time, we were providing, as part of our educational programs, books to our various clients. When we identified someone as being at risk for diabetes, we would show them various books that help educate that person about how to eat better and make better choices. The original idea behind BookPal was limited to supplemental healthcare material. We ended up picking up various health plans.
Fast forward to 2009, the core business had been sold in late 2007 and I took some time off in 2008 when we had our third child. In 2009, I was ready for my next adventure and was looking at different marketplace opportunities and ultimately realized that this book company, which I had started along with the healthcare firm, had a much bigger potential than what I originally conceived it to be. I had been running this small book company doing a few hundred thousand dollars a year for a number of years. One day, it helped us complete an order for a business title. It then dawned on me that I wasn’t taking its full advantage. It made me realize that you do have to continuously evaluate things from different perspectives, because sometimes when you’re close to something, you make it into something that is more limited than it can be.
This business title was outside the scope of what we usually did in the healthcare space. When I looked closely at the market place to understand why a customer was coming to me for this business title rather than go to the larger bookstores Amazons and the Barnes, I realized that these other bookstores were very consumer-focused. They were geared to distributing a single copy of a book to a recipient as fast as possible. Amazon, of course, is well-known from a distribution standpoint of building out warehousing operations fragmented across the US as close to the major consumers as possible so that when somebody places an order, they can get the product delivered within a day or two.
When you look at what I was trying to accomplish within this business to business side of book sales, timing was less of an issue. It was more about the convenience of being able to place an order for 500 to 1,000 copies of a book, and have them delivered in a single shipment. Because of that fragmented inventory system, Amazon would sometimes ship 10 to 20 envelopes. Some of them would have one copy. Some might have 10 depending on how that particular book was inventoried. We simplified that process for our customers and provided them pricing advantages. It really incentivized the customers. The more they ordered, the less they paid for each copy.
Sramana Mitra: Let’s talk a little bit about a few different aspects of your business. What is the merchandising strategy? What kinds of books did you start with? By the way, what year did you launch this business?
Tony DiCostanzo: Formally, the company was started in 2005 at the same time as the healthcare business. Like I’ve mentioned, we sold the bigger healthcare company. I sold that in 2007. The book company was a hobby. I loved the Internet. I loved the ability of the web as a business model to drive leads and information. At that time, it really didn’t have any larger perceived value. We had some great accounts with some Air Force bases and Blue Cross plans but it was really limited to a couple of healthcare business. It wasn’t until 2009 that I gave it much attention.